(Boursier.com) — Bryan Garnier raises his target on HIS from 6.5 to 7.4 euros and reiterates its ‘purchase’ opinion. The broker believes that due to industry challenges, heavy investments in organic growth are unlikely, increasing the likelihood of higher shareholder returns. The decision on the use of cash was postponed until August. The analyst estimates that SES will have the flexibility to use around €2 billion of cash over the next five years while managing its debt levels. Even under a conservative growth trajectory, SES’s long-term cash generation is expected to remain strong, exceeding dividend payout requirements. SES is now the only incumbent with a strong balance sheet, and could take advantage of the “last survivor” advantage by providing greater opportunity for organic and inorganic growth relative to its peers.
Conversely, the analyst lowers his objective to Eutelsat from 5.3 to 3.1 euros and remains for ‘sale’. He sees the operator caught between a rock and a hard place in light of increasingly intense LEO competition, while rising capital costs limit investment capabilities. Despite the stock’s performance of -60% since the announcement of the merger with OneWeb, the broker maintains its opinion that Eutelsat is unattractive.
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